i didn't cover the trial, so for me to go back and go back to the record to go back and see how the reporters inside the courtroom covered it, how the pundits and the policymakers and the, some of the public opinion people that form public opinion in newspapers, you know, how they all wrote about it. everybody was beginning to throw flags and saying, wait a minute, is this america? i mean, can you really prosecute somebody like this and use testimony that's supposed to be secret from another, a grand jury, a state grand jury? i mean, there were just all kinds of legal corners that were cut. and, but it showed you that they were bound and determined to finally get edwin edwards. and they did. so that's -- but he survived it, and now he's in his rv traveling the country. >> and now h.w. brands and david

gainer appearing at the texas book festival in austin to talk about their books. they spoke and took audience questions for just over an hour. [inaudible conversations] >> it's nice to see such a large crowd out here today. i'm wondering, does this have anything to do with the fact that the debt and the dollar might actually be relevant topics today? we're really, really lucky to have two fabulous, prolific writers with us today. and what two topics could be more relevant than to talk about in today's climate of economic crisis. david graber and w.h. brands here to talk about their new books. i'm assuming we won't have any trouble getting questions from the audience, but let me do a couple of housekeeping things, first, because i'm hoping when you're impressed with the two authors, you're going to buy

their books in the book-signing tent. fifteen minutes after the end of the session, or actually it's so close it might be 15 seconds. the authors will sign their books at the book-signing tent. one thing about the festival, and i don't know about you guys, but this is my favorite festival. you know, i love south by southwest -- [applause] >> depending on which lord you're thinking about. [laughter] but along with celebrating books and authors, the festival benefits the texas public libraries and literacy across the state. proceeds of the sale of all books and merchandise in the sales tent benefit these efforts. we are celebrating our 16th anniversary this year. in the past 15 years, the festival has contributed more than $2.5 million to libraries and reached more than 35,000 children in low income schools throughout the state.

i want even and every one of you to buy -- each and every one of you to buy the books from both these guys because you're going to be able to read great books and also benefit this wonderful mission. um, i am not an expert in the debt and the dollar. i know a little bit about politics, and i found both these books fabulous. first, two quick introductions. i loved it when i began surfing the web trying to figure out who david was, the author of "debts: the first 5,000 years," the very first description i found stated that he's an american anthropologist and an anarchist. [laughter] i'm not sure how anarchists get together to write those books, but i like the idea. he currently holds a position of reader in social anthropology in gold smith, the university of london. um, he has previously taught at yale, he's the author of a number of books, essays and articles for harper's, the

nation, the new left review. >> an annual talk that honors outstanding anthropologists who have fundamentally shaped the study of our culture, and we're glad to have him here today. >> thanks so much. [applause] >> secondly on this panel, we have our own w.h. bill brands, and as far as i can tell since he's written -- is it 24 books? this is the only time he's actually out. he's just writing books most of the time. [laughter] he's the dixon allen anderson centennial professor of history, before that he taught at vanderbilt and texas a&m.

the privileged life and radical presidency of franklin delano roosevelt, 2008, and the first american, the life and times of benjamin franklin, 2000. like i said, 24 books. he's presented, i believe, eight times here. he's a past texas award winner at this festival, and he has not one, but two books at the festival this year, so if you can't get enough of him now, come back tomorrow. and that book is the murder of jim fisk, along with the book we're discussing today, greenback planet, how the dollar conquered the world. it actually sounds like a horror movie. [laughter] and maybe it is. so what i'd like you both to start off with today is have each of our authors talk about their books for a few minutes, and i'm going to ask a few softball questions and leave the hardball questions for you guys, and we're going to begin to have people queue up to ask those questions, and we'll keep them going on for as long as we possibly can. first of all, dade, tell me

about dealt. why? >> why debt? why do we have debt? well, one of the questions i asked, first questions i asked when writing the book is what is debt? because one of the things i was trying to explain was the strange moral power that debt has over us. it all started, actually, with a conversation i had with someone i'd met at a party about madagascar. i was talking about the third world debt crisis and how i'd been involved in these drop the debt campaigns as an activist around the year 2000. talking about the effects of structural adjustment policies inflicted by the imf. gave some examples that in madagascar they were forced to cut the budget radically to pay banks at approved interest rates, and as a result they had to get rid of their malaria eradication program. as a result, there was an epidemic in which 10,000 people died.

and, you know, the reaction was, that's terrible, but, you know, they borrowed the money. surely you're not saying they shouldn't pay the debt at all. and i thought about it, and this was a rather liberal lawyer, activist lawyer, actually, who i was talking to. what other thing would cause someone to say, wow, you know, it's really sad about all those dead babies, but, you know, of course you have to pay the debts, my -- i mean, come on, default? and, you know, what other circumstance would someone like that actually approve of the death of 5,000 babies? something about debt has this absolute moral hold over us, and that's really what i was trying to address. where does that come from? debt, i mean, what a debt is, if you want to know what a debt is, it's a promise, but it's a certain type of promise. and the way i like to put it, it's a promise that has been corrupted in some sense by mathematics and ultimately by violence because you can only return a promise which is a

deeply personal thing into an impersonal form like a debt into math, something that can be exactly quantified when there's an element of coercion. um, from there and that also makes it transferable. in a way to understand the origins of money and how promises become mathematical. and the history of that is what the book is really about. >> good answer. let's move from debt for a second to dollars. greenbacks. >> yes. i wrote about the dollar. the short answer is that i was asked to write the book, but the answer as to why i said yes is that i have been talking about the dollar in the, well, now 30 years that i've been teaching american history. it's something that's very easy to take for granted. you can pull a dollar bill out of your pocket, you can take it to the store and spend it. but if you think about it for a minute, there's a certain kind

of magic because the piece of paper you pull out of your pocket is not worth a dollar. it works even better if you happen to walk around with $100 bills in your pocket. and i regularly ask my students why is this so? you know? what is it that makes this piece of paper worth, i don't know, five hours of someone's time or phi large pizzas or something like that? and we get into the legal background of it, and i do a magic trick where -- i don't very often get to do magic tricks, but i do a magic trick. in fact, let's see, maybe i can do it now. here it is. aye got this -- i've got the this piece of paper. not very many of you can see it, but it's a $5 bill. and if i take it into the cvs down the way or any store, i can exchange this for five dollars of really solid stuff, food, medicine, whatever it might be. but this piece of paper, this

piece of paper isn't worth intrinsically $5, but there is something on the piece of paper that effects this kind of magic, that makes it worth $5. and probably those of you in the back row won't be able -- certainly can't see. for anybody, there is a magic formula that is printed on this piece of paper that makes it worth $5. it takes a piece of paper that's intrinsically worth a nickel and transforms it into something that is worth $5. do any of you know what that magic formula is? show of hands? anybody? no? somebody, well, somebody's waving money back there. yes. >> [inaudible] >> well, u.s. treasury is a good start, but that's not the magic formula. in the way back. legal tender. there it is. okay? in fine print on the front it says this note is legal tender

for all debts, public and private. which means if you're offering something for sale and you put up a $5 price tag on it and i walk in with one of these, you have to take it, and that's the magic. but why does it work? i mean, congress can say -- and that's where the formula comes from -- congress passed the first legal tender act in the middle of the civil war. until then dollars in american history were coin money. they were gold or silver. there were private notes that were circulating that represented themselves as money, but they weren't legal tender. you didn't have to take those notes any more than you have to take a check. now, i started writing this book because it had historical interest, but as i was writing it and even since it's come out, it has developed greater contemporary interest. one of the things that i say at the end of the book is that the dollar is almost certainly going to lose its privileged standing

as the world's reserve currency. and foreign creditors to the united states are going to do their best to diversify their currency portfolio. what do you do you know? just in the paper a couple of days ago reuters had a report that china has agreed with the association of the southeast nations can be translated in the yuan rather than dollars. and then yesterday i saw something on tv which flew in the face of my magic trick. it seems that the legislature of louisiana -- have you heard of this? just happened in the last couple of days. the legislature of louisiana passed a law that said that people who sell secondhand goods cannot accept cash for those goods. and they cannot. now, in the first place this strikes me as it's probably in

violation of federal law because if it's legal tender, it's legal tender. but secondly, it raises some really interesting questions about the direction of the dollar. if cash isn't good anymore, then what in the world are we going to go to? so that's a long-winded way of saying that's why i wrote the book. [laughter] >> remember, that is louisiana you're talking about. [laughter] let me, let me throw -- let me throw a question out to both of you to start with, and i want to throw some specific questions about the books. we are in the middle of what everybody seems to agree is an economic crisis around the world. and part of that crisis is the place of the dollar. okay, assuming that chinese currency or the euro, especially the euro's in any better shape, the yen, obviously, hasn't done very well in the 20 years since the japanese collapsed.

at the same time, we've just had this incredible crisis over the debt crisis which, david, i think you would say was maybe not what everybody thought it was. so where exactly considering where you guys are coming from, what are we liable to be getting into in the 21st century? i mean, is there a replacement for the dollar? you know, is this debt crisis going to blow up on our entire economic system? >> go ahead. >> well, hard to know where to start. >> i was just going to tag something on to what you said. i think the actual amount of dollar is three cents because that's how much the federal reserve pays the mint to make them, no matter what the denomination. so, yeah, the system of money we have now, one thing it's important to remember is that it took a long time for the u.s. one of the last large nations in the world to kind of come over to the central bank model. there was a big fight early on,

they got rid of it. but the basic model for how modern money works is in a lot of ways almost the opposite of the way people talk about it in mainstream political discourse. i always like to give the example of the bank of england. in 1694 a group of london merchants made a loan to the king of england to fight a war in france -- it was always a war. and he gave them the right to take the 1.2 million pounds that he now owed them and to lend it to other people in the form of bank notes. that's what british pound sterling bank notes are, and, in fact, i don't actually have any in my pocket anymore, but if you look at a ten pound note, it has a picture of the queen, and it says i promise to pay the bearer ten pounds. it's a promise to pay ten pounds in, at that time, silver or gold and now worth something. and, you know, the way that's

mainly affected is you can pay your taxes with it so it cancels the debt with a credit. but it is circulating government debt. and in a way that's what money has continued to be, modern money. the federal reserve works with a lot more smoke and mirrors mirrn the bank of england, but it's the same principle. they make up money, lend to it the government and circulate the debt. so that money is, effectively, now circulating debt. as a result, the government got rid of the debt entirely. there was a study which now came out under the clinton administration when they were trying to get rid of the deficit or they went into a budget surplus, what happened if they got rid to have debt entirely. and they concluded it would cause an economic catastrophe. you need, because banks would have to make up all the money. in certain periods of american history, they did do. but, you know, when andrew jackson got rid of the debt, the results weren't salutary. so in a way the wheels are

turning in the opposite direction we think they are. money isn't this slight resource which there's only so much of. the question is how much we create and who gets it. and that's, you know, that's the real political struggle. when you go on a global scale, it's very similar. for most of cold war history, the countries that actually were holding the treasury bonds, you know, the u.s. has this amazing advantage that it can effectively write checks that are then treated as if they were gold, and nobody ever cashes, they just roll them over. it used to be west west germany was one of the bigger holders, the gulf states, japan, south korea. what do they all have in common? they're all under u.s. military protection in one way or another or have u.s. military bases. and in a way the amount of the debt, exterior debt is almost exactly the same or at least increases along with military spending. so these people are lending us the money to create these armies that sit on top of them and never quite pay us back. now that china's gotten involved, it's a little more

complicated. but that's the system that is being challenged. and it is simply threw that for the last -- true that for the last few hundred years the global currency has pretended to be the premiere military power. i don't think that's a coincidence. how exactly it works, we could all talk about. so it strikes me that that's what's being contested here, was the primacy of the dollar. and it's not only what other currency, but would possibly replace the u.s. as hegemon? >> the question of the future of the dollar is closely related to the future of the american economy as david just suggested. the country that has the biggest, most powerful economy is usually the one that dictates the terms of world finance. you can see this in the case of the united states. the united states was the most product i economic power in the world by the beginning of the 20th century. at that point it remained an international debtor, but during the first world war, and as david said, it's always wars that bring this about, during the first world war as the

belligerence went very heavily in the united states, the united states tipped from being a debtor nation to the world's largest creditor. and the era of america's creditorship, when it was the cert of the world from the 1910s to the 1908s. and it was -- 1980s. and it was during that period that the dollar and american diplomats wrote the rules of the international financial system, specifically the bretton woods system that originated at the end of the second world war. at that time america's industrial production, america's industrial gdp was roughly equal to that of the rest of the world combined. and with that kind of leverage, the united states was in a position to dictate to the rest of the world. the world financial system, other currencies were linked to the dollar, and the dollar was pegged to gold. and that gold peg was considered quite important because something like a gold standard has always been a check on

governments from producing more and more of the notes. if you have legal tender and, as i said, for the first time in the united states this came into effect in the 1860s. and it occasioned great controversy because until then governments could not be trusted not to just run the printing press and run the printing press until the dollar or the currency became worthless. that's what happened to the confederate currency during the civil war. the union government was more circumspect, and it won the war, and so it was able to redeem those o legal tender dollars. but gold still remained the model of a currency. gold because governments can't produce it, only god can produce gold. and gold remains a linchpin of world currencies from 1945, the end of the second world war, until the 1970s. but by then the united states had slipped -- it was still the number one power in the world economically. but it no longer had the

advantage over the rest of the world that it had. this was ineffable. there -- inevitable. this wasn't the result of policy decisions by the united states or its leader, although those contributed. lynn don johnson's decision to fund the war society put great strain on the economy. from 945 until the mid 1960s the rest of the world began to recover from world war ii. the united states was in a very basic way the only winner of world war ii. and the united states stood atop the pinnacle of economic power. the american economy continued to grow after 1945, and so you could say that the top of the mountain got taller. but the slopes of the mountain got taller faster. so by the mid -- by the early 1970s america probably had something on the order of a third of world gdp. and it would continue to decline. and it's down to around a

quarter to a fifth of world gdp now. so under these circumstances it's quite unrealist to expect that the dollar will continue to have this way that it had 60 years ago. now, this doesn't mean that the united states will be knocked from it perch immediately and entirely. there is no single currency that is a viable alternative to the dollar. at least not at the moment. much more likely will be some sort of market basket of currencies. or the individual sovereign debt, sovereign wealth funds and people who have large currency holdings will simply diversify. instead of holding dollars, they'll hold dollars and euros if you want. so it's more or less inevitable, if you ask me. there are 300 million people in the united states, there's seven billion people in the world. and so under or those circumstances things are going to even out a bit more than what they were 60 years ago. >> one of the wonderful things about both these books besides

the fact that both these gentlemen are teachers who can really write which is not something you always see in scholars, these are really, really great books to read. these books are almost more than just an op-ed piece about debt and the dollar today, they're histories and really, really interesting histories about things most of us don't know much about. i'm going to put david on the spot oh here. one of the most interesting things you wrote about was talking about debt in the context of the slave trade within africa. it just was an amazing chapter. can you talk a little bit ant that? >> yeah. one of the fascinating things to me, i discovered all sorts of crazy things when i was researching this book. you know, ranging from debt cancellations in mess to mesopo, but one of the things that really struck me was about the slave trade because, um, when i

was drop the debt campaigns, one of the whole arguments was, you know, africa's the most indebted continent in the world. anyway, the argument was who owes what what to who here? we don't know, look what you did to us. which is a fair case, but you can make that case even stronger if you look at how the slave trade was conducted. this was entirely carried out through the manipulation of debt. the stage where people are coming in and just militarily taking people away. you know, that did happen, but it was often an initial stage, and it was followed up by creating these really elaborate debt traps so that the whole thing was a very, very complex credit scheme where merchants in england would forward funds to merchants working overseas, would forward or funds to african merchants, and everybody would be advancing something to someone else until it got the local level where, for example, one common pattern was to foment wars between people who would be

having them otherwise because indebted kings had to figure out some way to pay back their creditors. an even more common one was simply to advance goods and get people caught in credit traps. another way was to corrupt the legal system. so that any crime, you know, you have to pay an enormous penalty, and if you can't pay the penalty, then you get sent away. so there are all sorts of different techniques, but there's this gigantic network of debt traps. and why i find it interesting, it's intrinsically important in itself, but one reason is probably the model of what must have happened in human history and a lot of other places. there's a sort of very rapid, traumamatic, catastrophic version of what i, what i call human economies are converted into commercial economies. because you do have these very complex systems of debt that exist in traditional societies. but if you look at money as an anthropologist, you look around

world, the most common use of money in places where you don't have states is not to exchange goods and services which are usual lu, you know, there's -- usually, you know, there's complex gift systems where you actually dispose of your cows and your acquired tools, you know, ordinary things that we buy and sell they don't. but they do have money, and they use it to rearrange social relations with one another. you know, if people have to settle fines, if there's quarrels, um, if there's a marriage needs to be negotiated, so social relations are actually carried out through money and what we would consider economic relations aren't. and what happened is that, you know, this sets up a way that the whole system can be corrupted. so people show up. the way i usually put it is like imagine what would happen to our society if a bunch of space aliens suddenly showed up with, you know, incredibly powerful weaponry, no morality whatsoever, and said, okay, well, we'll give a million dollars to anybody who provides

us human workers. we're not going to really say what happens to them, just go ahead. somebody's going to take the bait, and all it takes is a few. but what they ended up doing was, um, converting what had been monetary systems used to rearrange relationships with people into ways of extracting people. and i think that if you want to look at how money originated in the form that we have, it was exactly a process like that that probably happened 5,000 years ago in places like mesopotamia of which the records are now lost. >> bill, there are a number of different, important figures that appear in american history that appear in your book. two of them are figures that are very important to me. back when i was a young political scientist doing an analysis on the populist party, william jennings bryan and his speech which, by the way, recorded years later, one of the great speeches of american politics, it's a big part of

william sapphire's book on speeches, and great speeches were delivered in a very different way back then because he sounds kind of squeaky. so you've got william jennings bryan, the cross of gold, and my own political hero when i was a kid, richard nixon. no lie. don't tell anybody. [laughter] so tell us how bryon and nixon affected the dollar in their own times. >> richard nixon would roll over in his grave to be compared to william jennings bryan. [laughter] but in a very fundamental way they were aiming for the same thing. william jennings bryan became the spokesman of the populist movement in the 1890s and at the heart of the populist movement was a belief that the financial system of the united states was tilted against farmers specifically. ordinary people generally, but farmers specifically. and they had a very specific complaint, namely falling prices for farm products. the price of corn went down by half between the 1870s and the

1890s. wheat was comparable. cotton was a little bit more than this. this was a very serious problem for farmers because farmers typically operate under conditions of debt. and debtors are very seriously disadvantaged when prices fall. if you borrow $100 when wheat is a dollar a bushel, you have to grow 100 bushels of wheat to pay it back. but if price falls to 50 cents, you have to grow 200 bushels to pay it back. and so the fundamental goal or the trick behind managing a money supply is to get the money supply to grow at the same rate as the economy as a whole. and if you do, then prices overall will remain stable. the fall in prices was, in certain respects, a consequence of the success of the american economy. that is, the economy was growing faster than the money supply. and so prices were falling.

farmers were disadvantaged by this. and farmers, their spokesman -- william jennings bryan -- claimed that the way to alleviate their distress was to expand the money supply. and this made perfectly good economic and financial sense. but it seemed to those people who were creditors that it was a kind of theft. because to devalue the dollar meant that their debt, what they were owed, was worst less than it had been the day before. ..

>> farmers were going to vote to and the owners voted for another the owners would oppose them. they would vote for mckinley and the preservation of the gold standard. the wild card in this particular campaign was the new industrial working class. those that work for the capitalist who share the standard of living which way

would they go? all sorts of devices is a and shenanigans were employed to get the urban workers to side with the farmers or the capital they made a decision in favor of their bosses rather than the working class comrades. with this the idea of adding sober to currency went out the window and near tye in the grip on the gold standard and it lasted through the depression through 1971 when richard nixon did advocate by cutting the united states off from the international gold standard. >> is it true the "wizard of oz" is about that because

one interpretation is the yellow brick road and going to the emerald city of oz. but also the story that dorothy is of former blown away from her farm. sometimes theodore roosevelt was scarecrow who is a farmer has no brain and gets four closed-end the cover the lion is the political class a will not do anything about it. [laughter] [applause] >> pez that mean the wizard is mark hanna running the campaign of mckinley as he sat on the front porch? >> this is the interpretation. of the interpretation rose

almost at the same time the "wizard of oz" came out. the author never in the knowledge this is what he was doing. i don't know if he decided okay i did it auction -- they did not but if people want to make in to it what they do maybe he just thought it was better but it may have been simply people reading and to what they wanted prize suspected it was something in between that there was imagery coming from any populist leaning during that period. so the fact dorothy is theodore backwards seems a bit of a stretch. [laughter] and you really have to turn the roosevelt on his head but it is interesting story and they have been dining on

it and frank baum is dead city cannot deny a it. >> one more question then we will start taking questions from the audience. one of the interesting things is the whole idea of morality. i was taken with the idea was some vse anthropologist writes the history of data and we think of that as a bad thing. that was used effectively with the last crisis will idea of comparing household debt to american debt to which there maybe problems with. also debtors' prison which we've talked about so talking very briefly about bull idea of debt and morality in the political use of that. >> one of the things was fascinated if not for debt

and sen also was sanskrit and other writings not he broke -- but nine years and the lord's prayer forgive us our trespasses that is the earlier translation our earlier was forgiven says that's just as though we forgive those who was money. but we don't really do that do we? [laughter] that fema shows up over and over and it is invesco lampert alike the beginning of plato's republic the opening salvo of western political philosophy starts with is that justice is just

a matter of paying your debts. socrates blows that out right away. isocrates says that is ridiculous but but that then it is after all of the great religious turks if you go back to the origins of hindu philosophy they talk about your debt to the god and repay us then to make it clear that is not true at all. you also would that your parents and to the states so you repay the debt by realizing there isn't a dead. it raises the question how can you know, something to the cosmos? and that is absurd serialized that end in the bible mr. by freezing morality as debt than they

say it is actually forgiving debt. redemption, canceling debt. a great tradition that is defined. there is that ambivalence that his constant so people do act to say you cannot ask people to cancel their debts but it the fact it is the same thing looking throw world history it is impossible to find a money lender. how do swear that? there is of fundamental in coherence behind the way we talk about these things with the historical legacy that we cannot even see. and the most powerful way ever invented to make it seem moral, you say i could

kill you. i did not. therefore you owe me i will tell you exactly how much. i will let you off the hook for the next couple months but then you better show the money now suddenly the victim is the one running around feeling like a jump. the only real reply you could make is wait a minute. who owes what to who? the moment you say that you are using the language of debt. that is the language that is thrown at them. but the use that in order to slow the blow away to say really morality is something else. we have to use language or debt and then we slowly move away but can never completely move away from it. >> i would like to give too brief counter examples that debt is considered a bad

thing. alexander hamilton considered national debt to be a good thing and encourage the federal government to take on the revolutionary war debt of the states. hamilton did this with great calculation because the -- he understood creditors make three interest in the success of whatever individuals or enterprises owe them money. of the wealthy people of the united states were owed money by the federal government then it is in their interest to ensure the success of the federal government. so they would believe it would be a natural blessing to ensure the success of the government in the early 20th century the u.s. and covering gauged in dollar diplomacy. in the essence of dollar diplomacy to encourage especially regimes in latin america to transfer the debt

that they owed to the european banks and bankers to american banks and bankers. this would eliminate the temptation of the european government to secure the debt and send in the gunboats in make sure the interest of the latin american countries now look to new york rather than europe. that has been something that has been used for political purposes at least in american history since the united states began. >> something you may want to incorporate in your answers it is first of all, that must mean that is great 20 china. >> there is a sign eight -- st. p.o. the bank a thousand dollars you have a problem if you of the bank a million dollars in the bank has the problem. [laughter] [applause]

>> the corollary is of the dollars of the currency then what does that mean for us to buy books later on? [laughter] >> a portion of the sovereign debt to what does it do to the future growth? historic we -- historic belly, . [inaudible] >> i will try. the effect it is to non americans but then what sort of term do they exist to

roll over the debt? in china it is quite happy to roll over the debt. no problem. both sides say noted in system higher interest rates to take money elsewhere then that is a crimp on the american economy the interest-rate costume rise to attract the money to roll over the dead in the interest rate that the treasury pays filters through down three everything else to the extent that the debt is owed internally from one generation to another than in terms of the productivity than that part is awash then there is the of issue of taking outside the realm of economics per se that are there political ramifications? not on the subject of debt per se but during the 1970's the arab oil producers decided they would embargo shipments during the 1973

war. that was a political decision economically it should go to whoever would be willing to pay. if there should be a political moment of two decisions regarding debt than that would raise all sorts of very difficult and potentially explosive political consequences. >> to become a sovereign debt crisis is disingenuous for those cetera and political situations. look at the country's and have a real sovereign debt crisis they don't control their own currency may be in argentina when it was tied to the dollar or they have other things they can do in in a country like america we can create a currency that is used as a world reserve with an entirely different position.

we will never be in the same situation as greece and argentina. that is not a fair comparison. we have different problems that are much more long term >> there is a lot of talk a great now about passing a balanced budget amendment. what is the like the economic impact? >> >> of the budget was passed or the amendment was balanced? [laughter] >> the bill was passed that would be like saying we will all go to have an. [laughter] it would have about that much effect because and if you look up the budget of the state of texas nearly everything has a balanced budget requirement but all subterfuge is to get around

that. heavy think the federal budget is due to creative accounting principles now then just imagine what it would be if you had to balance each year. in the first place i would be extremely surprised if such an amendment were passed but if it were, i think it would wreak havoc with any way to understand the budget simply because if the budget was balanced, if it has to be balance after the year 2030 past next year than you could phase-in but if it kicks in with quite short order, that would aggravate dramatically if it had to be cut by $1 trillion per year. >> i do want to recall old debates under clinton when they have a surplus and pretty much everybody across

the political spectrum started to see with that would mean over the long term if they got rid of the debt entirely seeing this would be a terrible idea going to the clinton people like those like alan greenspan who started to say he had to come up with an excuse of anti-keynesian to say if there is no government said there is no money supply. that means socialism because there is such a surplus with government has to put the money somewhere to buy something silly will nationalize everything and we will have a communist economy. [laughter] >> we have room for more questions. >> can you explain what it

is wampum. >> it is made from a certain type of show a certain type of clam. it was used largely as a way to make treaties and arrangements in contracts with hot peacemaking but when settler showed up they do not have access to gold and silver. at one point* is systematizes of trading with the native americans with the fur trade became a currency of trade. no evidence that it became

the from the 17th century largely it took a fairly casual means of negotiations turning it into money. is similar to the purchase of manhattan which is a classic example of two people thinking something totally different was going on in. the people on the other side thought this was day presentation of rare exotica as they pledge good faith for a political treaty for the access but i will pick about-- piggyback briefly. the factor in the first few decades of american national existence is a shortage of many that the british colonial government disallowed paper many. so people were stuck with gold and silver but that was

rare especially in the colony's. so they got used to devising other means of currency. it would nominate in terms of tobacco when andrew jackson and went out as a young man tennessee at the time was part of north carolina at. he went to practice as a lawyer there was not enough money to go around so the legal fees were quoted and paid off 10 acres of land. so if you wanted to will it was 80 acres were litigation was a quarter section. these are markers of value in the way to do triangular trade of one person wanted to do something you could barter back and forth but once the economy gets more complex, you have to have something that stands for

value. gold and silver were considered the best paper was disallowed.3 >> i will lead up to the question if you go up to roosevelt to put the insurance in 19332 help the farmers who lost tens of money in the bank the spring game regulations were in place 60 years until i believe 1993 is when the illustrious congress removed the regulations on banking. my question leading up to this, what is the comments of regulation of the big gain industry? alan greenspan of the free market? >> in history it is

notoriously difficult to determine cause and effect but going along with what you mentioned in 1933 franklin roosevelt and congress passed a number of banking regulations to ensure that banks don't do they had done during the 1920's, namely to take depositors money and invested in the stock market. it seemed like a good idea. as long as shares we're going up. while they could land that out on mortgages they could make 25 percent per year on the stock market. they pay depositors 2% in then the rest is seem like a wonderful thing into the stock market crashed. than the depositors rather than buying shares of stock with the perceived greater security in the bank's bank's, found they have lost

their many. under the roosevelt administration the democratic new deal passed a resolution. those regulations were in place through the 1990 and repealed in the late 1990's and eight years later we have the financial crisis of 2008. it is impossible to prove beyond the shadow of any doubt that one needs to the other. it is impossible to prove because you cannot rerun the experiment with a different premise but it does suggest there is nothing like 1929 until the regulations were repealed then along comes 2008 which is the worst

financial crisis since 1929. >> when we use the word regulation it is important to remember that regulation has not stopped. we have this weird word trap when we have some we do have regulation they do like that is not. therein s an incredible elaborate code. >> but you think they will ever get around to regulating trading and derivatives? >> i don't know the answer to that question. i did read an article i couple weeks ago saying president obama has raised more money from wall street in the financial community and all republicans combined. so to have ties that close

to wall street, i will not hold my breath for tighter regulations. >> you comment on the federal reserve and the shareholders and also the current policies that have been audited or abolish? >> the federal reserve has been everybody's favorite whipping boy since 1913 recreated. it has made its share of missteps but so during the 19th century been how things were from 1913 through the present -- with panic and bubble there is a panic of 1837 and 1857 and panic of 1873 and 1893 in

1907. than the federal reserve is created 1913. yes there was a panic 1929 and the fed got that wrong. says that let the money supply to shrink as much as 1/3? but the fed learned from that in the american financial system from then forward has performed a lot better as to the question ron paul contends the federal reserve is unconstitutional and if you look at the constitution in particular section 8 article i that specifies innovate -- enumerated powers is says congress has the power to coin money. it does not say congress has the power to print money. this is where ron paul brandi libertarians say the federal reserve is

unconstitutional. they do have a supreme court decision in their favor. in 1870 the supreme court ruled, remember the legal tender notes coming out of the civil war? the supreme court ruled the legal tender lot and a note to were unconstitutional. but before that could work its way through the economy coming to of the justices retired and they change their minds in st. legal tender was constitutional. so if ron paul was to go back to the 1870 decision that is his prerogative but since the early 1870's the supreme court has said it is constitutional. we will live with that until we get president paul. >> and as a result coins are still produced by the federal government it is

just dollar bills. >> for those of us ever nostalgic for the supreme court of 1870. >> we have a few more questions. >> i am curious about your opinion of the phenomenon of our generation graduating with crushing debt from college. do you call that a debt trap? bernanke's. >> what is the impact of that? >> the nightmare scenario that people envisioned was thin and lending it that people of go so deeply into debt that the children then

they could sell them soc and there is the various mechanism put into place which is the most famous of debt cancellation. all debts are canso commercial. that is another version of the same thing. but if there is dawdle could be put into a time machine machine, you probably make good distinction between selling your soul to work for strangers who were worked renting yourself. you would say these people -- the great social crisis has happened to was. those that call slavery is now called